Research Institute for Sustainability Helmholtz Centre Potsdam

On the quality of emission reductions: observed effects of carbon pricing on investments, innovation, and operational shifts. A response to van den Bergh and Savin (2021)

To meet the Paris Agreement targets, carbon emissions from the energy system must be eliminated by mid-century, implying vast investment and systemic change challenges ahead. In an article in WIREs Climate Change, we reviewed the empirical evidence for effects of carbon pricing systems on technological change towards full decarbonisation, finding weak or no effects. In response, van den Bergh and Savin (2021) criticised our review in an article in this journal, claiming that it is “unfair”, incomplete and flawed in various ways. Here, we respond to this critique by elaborating on the conceptual roots of our argumentation based on the importance of short-term emission reductions and longer-term technological change, and by expanding the review. This verifies our original findings: existing carbon pricing schemes have sometimes reduced emissions, mainly through switching to lower-carbon fossil fuels and efficiency increases, and have triggered weak innovation increases. There is no evidence that carbon pricing systems have triggered zero-carbon investments, and scarce but consistent evidence that they have not. Our findings highlight the importance of adapting and improving climate policy assessment metrics beyond short-term emissions by also assessing the quality of emission reductions and the progress of underlying technological change.

Publication Year

2022

Publication Type

Citation

Lilliestam, J., Patt, A., & Bersalli, G. (2022). On the quality of emission reductions: observed effects of carbon pricing on investments, innovation, and operational shifts. A response to van den Bergh and Savin (2021). Environmental and resource economics, 83(3), 733-758. doi:10.1007/s10640-022-00708-8.

DOI

10.1007/s10640-022-00708-8

Staff Involved

Share via email

Copied to clipboard

Print